Michel Dumont

World inequality, globalisation, technology and labour market institutions

Purpose - The paper aims to assess to what extent the general trends with regard to world inequality can be explained by rising international economic integration, technological change and (labour market) institutions. Design/methodology/approach - Based on the existing literature, the stylized facts on inequality between and within nations, globalisation and technological change are reviewed, after which the empirical evidence of the impact of international trade and poverty in developing countries is discussed. Findings - The paper argues that despite substantial theoretical and empirical contributions, so far no straightforward conclusions are warranted. However, historical evidence suggests that, from a policy perspective, the rise in inequality – witnessed in a large number of developing as well as developed countries – ought to be acknowledged and tackled to avoid a possible backlash against globalisation. The inconclusiveness that empirical work on inequality and its determinants offers, might be explained by substantial differences across countries in their institutional framework. Originality/value - The importance of interactions between institutions, technology and globalisation and their impact on world inequality is still not very well understood. The paper is an appeal for investigating more these interactions.

Wage Inequality and Immigration: Western-Europe in the Sixties

We analyse the immigration flows to Western Europe in the sixties. We develop a theoretical model tailored to account for some of the key features of this period, i.e., trade in manufacturing that essentially involved advanced countries, the growing administration of labour markets in Western Europe and the huge inflow of low skilled immigrants from the South (less advanced countries) into Western Europe. Two propositions are subsequently derived from this model. First, the immigration flow increases with the skill premium in the country of destination. Second, for a given skill premium, immigration is an increasing function of both the host country’s working population and its relative endowment in skilled labour. The first proposition reflects a demand side effect that diverges from the result of the traditional self-selecting approach to migration, i.e., that a higher skill premium in the country of destination tends to discourage potential low-skilled migrants. Estimations implemented for a panel of four European countries (Belgium, France, Sweden and West Germany) over the period 1960-1975 corroborate to a large extent our propositions. We also find that none of the supply determinants are individually significant at equilibrium. These results confirm the hypothesis that immigration to Western Europe in the sixties was primarily demand driven.